Lean Performance ERP Project Management AU0532.indb 11/19/07 12:10:26 PM Series on Resource Management Rightsizing Inventory by Joseph L Aiello ISBN: 0-8493-8515-6 Integral Logistics Management: Operations and Supply Chain Management in Comprehensive Value-Added Networks, Third Edition by Paul Schönsleben ISBN: 1-4200-5194-6 Supply Chain Cost Control Using ActivityBased Management Sameer Kumar and Matthew Zander ISBN: 0-8493-8215-7 Financial Models and Tools for Managing Lean Manufacturing Sameer Kumar and David Meade ISBN: 0-8493-9185-7 RFID in the Supply Chain Judith M Myerson ISBN: 0-8493-3018-1 ERP: Tools, Techniques, and Applications for Integrating the Supply Chain by Carol A Ptak with Eli Schragenheim ISBN: 1-57444-358-5 Introduction to e-Supply Chain Management: Engaging Technology to Build Market-Winning Business Partnerships by David C Ross ISBN: 1-57444-324-0 Supply Chain Networks and Business Process Orientation by Kevin P McCormack and William C Johnson with William T Walker ISBN: 1-57444-327-5 Collaborative Manufacturing: Using Real-Time Information to Support the Supply Chain by Michael McClellan ISBN: 1-57444-341-0 Handbook of Supply Chain Management, Second Edition by James B Ayers ISBN: 0-8493-3160-9 The Supply Chain Manager’s Problem-Solver: Maximizing the Value of Collaboration and Technology by Charles C Poirier ISBN: 1-57444-335-6 The Portal to Lean Production: Principles & Practices for Doing More With Less by John Nicholas and Avi Soni ISBN: 0-8493-5031-X Lean Performance ERP Project Management: Implementing the Virtual Supply Chain by Brian J Carroll ISBN: 1-57444-309-7 Supply Market Intelligence: A Managerial Handbook for Building Sourcing Strategies by Robert Handfield ISBN: 0-8493-2789-X Integrated Learning for ERP Success: A Learning Requirements Planning Approach by Karl M Kapp, with William F Latham and Hester N Ford-Latham ISBN: 1-57444-296-1 The Small Manufacturer’s Toolkit: A Guide to Selecting the Techniques and Systems to Help You Win by Steve Novak ISBN: 0-8493-2883-7 Velocity Management in Logistics and Distribution: Lessons from the Military to Secure the Speed of Business by Joseph L Walden ISBN: 0-8493-2859-4 Supply Chain for Liquids: Out of the Box Approaches to Liquid Logistics by Wally Klatch ISBN: 0-8493-2853-5 Supply Chain Architecture: A Blueprint for Networking the Flow of Material, Information, and Cash by William T Walker ISBN: 1-57444-357-7 AU0532.indb Basics of Supply Chain Management by Lawrence D Fredendall and Ed Hill ISBN: 1-57444-120-5 Lean Manufacturing: Tools, Techniques, and How to Use Them by William M Feld ISBN: 1-57444-297-X Back to Basics: Your Guide to Manufacturing Excellence by Steven A Melnyk and R.T Chris Christensen ISBN: 1-57444-279-1 Enterprise Resource Planning and Beyond: Integrating Your Entire Organization by Gary A Langenwalter ISBN: 1-57444-260-0 ISBN: 0-8493-8515-6 11/19/07 12:10:26 PM Lean Performance ERP Project Management Implementing the Virtual Lean Enterprise Second Edition Brian J Carroll New York AU0532.indb London 11/19/07 12:10:27 PM Auerbach Publications Taylor & Francis Group 6000 Broken Sound Parkway NW, Suite 300 Boca Raton, FL 33487‑2742 © 2008 by Brian J Carroll Performance Improvement Consulting Auerbach is an imprint of Taylor & Francis Group, an Informa business No claim to original U.S Government works Printed in the United States of America on acid‑free paper 10 International Standard Book Number‑13: 978‑0‑8493‑0532‑0 (Hardcover) This book contains information obtained from authentic and highly regarded sources Reprinted material is quoted with permission, and sources are indicated A wide variety of references are listed Reasonable efforts have been made to publish reliable data and information, but the author and the publisher cannot assume responsibility for the validity of all materials or for the conse‑ quences of their use Except as permitted under U.S Copyright Law, no part of this book may be reprinted, reproduced, transmitted, or utilized in any form by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying, microfilming, and recording, or in any information storage or retrieval system, without written permission from the publishers For permission to photocopy or use material electronically from this work, please access www copyright.com (http://www.copyright.com/) or contact the Copyright Clearance Center, Inc (CCC) 222 Rosewood Drive, Danvers, MA 01923, 978‑750‑8400 CCC is a not‑for‑profit organization that provides licenses and registration for a variety of users For organizations that have been granted a photocopy license by the CCC, a separate system of payment has been arranged Trademark Notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe Library of Congress Cataloging‑in‑Publication Data Carroll, Brian J Lean performance ERP project management : implementing the virtual lean enterprise / Brian J Carroll p cm Includes bibliographical references and index ISBN 978‑0‑8493‑0532‑0 (hardcover : alk paper) Production control Production management I Title TS155.8.C37 2008 658.5‑‑dc22 2007024944 Visit the Taylor & Francis Web site at http://www.taylorandfrancis.com and the Auerbach Web site at http://www.auerbach‑publications.com AU0532.indb 11/19/07 12:10:27 PM Contents Figures xi Foreword xv Preface xxvii Acknowledgments xxxvii About the Author xli Part I: Introduction to Lean Performance Chapter 1 Foundations of Lean Performance When the ERP Project Manager Is the Lean Champion The Organizational Consequences of Mass Production The Origin of Lean Production 10 What Is Lean Production? 14 Why Aren’t More Firms Lean? 16 What Is Required to Become Lean? 18 Chapter 2 Extending Lean Performance Foundations .21 Implementing Lean Cross-Functional Processes .21 Lean Quality Management 23 Lean Maintenance 24 Lean New Product Introduction 25 Lean Design and Engineering 26 Lean Accounting 27 Chapter 3 Lean Performance Methodology 33 What Is the Virtual Lean Enterprise? 33 Lean and ERP: Why Can’t We All Just Get Along? 35 The Failure of ERP Implementations 42 Lean and Six Sigma 44 Why Should Our Enterprise Be Lean? 45 The Three Levels of Lean Business Process Management 49 AU0532.indb 11/19/07 12:10:27 PM vi n Contents Lean Business Process Strategic Level: Lean Policy Deployment 50 Lean Business Process Organizational Level: Lean Process Innovation 53 Lean Business Process Activity Level: Lean Performance Implementation 62 What Is Lean Performance? 66 How Does Lean Performance Improve Processes? 68 Why Lean Performance Is the Best Lean Methodology 69 Chapter 4 Lean Cross-Enterprise Processes 81 What Is Lean Commerce? 81 Lean Customer Relationship Management 88 Lean Production Smoothing 90 Lean Supply-Chain Management .100 Lean Performance China Strategy 103 Supporting a Lean Factory Flow 104 Toyota Production System and Lean Commerce 108 Implementing a Virtual Lean Enterprise 110 Chapter 5 Lean Principles, Tools, and Practices .113 Lean Cultural Principles 113 Process-Oriented Thinking Means What Before How 115 Product Quality Results from Process Quality 115 Every Process Needs a Process Standard 116 The Process Owners and Operators Are the Process Experts 117 The Next Process Is Your Customer 119 Loyalty to People Enables Continuous Improvement 119 Process Data and Measurements Drive Process Continuous Improvement 122 Lean Cultural Principles Checklist 122 Process-Oriented Thinking Means What Before How .122 Product Quality Results from Process Quality 123 Every Process Needs a Process Standard .124 The Process Owners and Operators Are the Process Experts 125 The Next Process Is Your Customer 126 Loyalty to People Enables Continuous Improvement 126 Process Data and Measurements Drive Process Continuous Improvement 128 Lean Transformational Principles 129 Precisely Specify Value by Product or Family .129 Identify the Value Stream for Each Product .129 Make Value Flow Without Interruption .129 Let Customer Pull Value from the Process Owner .129 Pursue Perfection .129 AU0532.indb 11/19/07 12:10:27 PM Contents n vii Lean Transformational Principles Checklist 130 Precisely Specify Value by Product or Family .130 Identify the Value Stream for Each Product .130 Make Value Flow Without Interruption .131 Let the Customer Pull Value from the Process Owner .131 Pursue Perfection .131 Lean Diagnostic Tools 132 MUs 132 Ss .137 Ws-1 H 142 Ms 146 Lean Performance Practices 152 Management Policy Deployment 152 Lean Performance Teams 154 Visual Management 155 Lean Performance Analysis 155 Chapter 6 Steering a Lean Performance Project 161 Management in the Lean Performance Project 161 Advocate 162 Champion 162 Sponsor 162 Communicator 162 Motivator 163 Team Builder/Team Player 163 Educator/Developer 163 Change Agent 163 Facilitator/Coach/Catalyst 164 Mediator/Negotiator 164 Completing the Lean Performance Assessment .166 Lean Performance Assessment 167 Lean Enterprise Future State 167 In Our Future Lean Enterprise 171 Enterprise Lean Vision Elements (Add/Change to Fit Your Lean Enterprise) 172 Our Process Owners (Managers and Supervisors) 173 Company Readiness .173 Opportunity to Make Lean Applications 176 Company Capability to Become Lean 177 Lean Performance Project Constraints 180 Analyzing Lean Performance Assessment Results 183 Preparing for the Lean Performance Project 184 AU0532.indb 11/19/07 12:10:27 PM viii n Contents Part II: Lean Performance Planning Modules Chapter 7 Deploying Management Policy Module 189 Management Tasks 189 Organizing the Steering Committee 189 Confirming the Lean Vision 191 Identifying and Deploying Lean Business Policies 191 Identifying and Deploying Lean Project Strategies .192 Defining the Project Mission 195 Defining the Project Scope 196 Setting Up the Project Organization 197 Identifying and Deploying the Project Objectives 199 Conducting Steering Committee Meetings 203 Chapter 8 Evaluating and Selecting Software Module 209 Management Tasks 212 Organize the Software Evaluation and Selection Project Team 212 Project Team Tasks 213 Organize the Project Office and Conference/Education Room 213 Determine Key Lean Software Features Workshop Attendees 213 Review All Lean Strategy/Policy/Project Objectives LPA Masters 214 Conduct Process Area Workshops 214 The Forms of Office MUDA Checklist 215 The Ss in the Office Checklist 216 The Office Ss Checklist 217 Ss in the Computer Room Checklist 219 Conduct Key Lean Software Features Workshops 220 Process Stream Key Lean Features Checklist 221 Prepare a Draft of the Key Lean Software Features Checklist 223 Report Progress to Management Steering Committee 223 Chapter 9 Managing Project Module 229 Project Team Tasks 229 Maintaining the Project Summary Bar Chart 229 Maintaining Project Communications .229 Maintaining the Project Plan 230 Maintaining an Open Issues Resolution Process 230 Maintaining the Project Organization .235 Maintaining the Quality Assurance Process .236 Reporting Progress to the Steering Committee 239 Chapter 10 Developing Lean Performance Teams Module 241 Project Team Tasks 241 Finalizing Projects and Strategies .241 AU0532.indb 11/19/07 12:10:28 PM Contents n ix Developing the Site Configuration 242 Identifying All Processes 244 Developing Site Teams .254 Developing Lean Performance Team Training 254 Reporting Progress to the Steering Committee 265 What Follows Lean Performance Planning? 265 Part III: Lean Performance Improvement Modules Chapter 11 Improving Process Performance Module 273 Management Tasks 273 Maintaining Lean Performance Teams 273 Conducting Steering Committee Meetings 274 Project Team Tasks 275 Lean Performance Team Education 275 Human Resource Team Tasks 278 Finance Team Tasks 286 Engineering Team Tasks 288 Materials Team Tasks 292 Operations Team Tasks 294 Information Team Tasks 296 Lean Commerce Team Tasks .299 Completing Lean Performance Analysis 304 Challenging Processes Checklist 320 Producing Work Instructions .329 Chapter 12 Integrating Systems Module 337 Project Team Tasks 337 Installing Hardware and Software 337 Initiating the System 338 Setting Up System Security 338 Creating Test and Training Environments 339 Creating Production Databases 339 Testing System Setup 339 Managing the Data Conversion Process 339 Evaluating Additional Software Packages and Interfaces 340 Conducting Process-Oriented System Design 342 Summarizing Proposed Modifications 342 Completing Hardware and Communications Analysis 344 Preparing Detailed Design Specifications 344 Managing Outsourced Programming 345 Defining Interface and Database Testing 346 AU0532.indb 11/19/07 12:10:28 PM ... 152 Lean Performance Teams 154 Visual Management 155 Lean Performance Analysis 155 Chapter 6 Steering a Lean Performance Project 161 Management in the Lean Performance. .. Completing the Lean Performance Assessment .166 Lean Performance Assessment 167 Lean Enterprise Future State 167 In Our Future Lean Enterprise 171 Enterprise Lean Vision... Why Lean Performance Is the Best Lean Methodology 69 Chapter 4 Lean Cross-Enterprise Processes 81 What Is Lean Commerce? 81 Lean Customer Relationship Management 88 Lean